Three Ways Nintendo Can Better Monetize Pokémon Go

Pavel Golubev is the CEO and Founder of Appodeal, a programmatic ad mediation solution that provides monetization solutions for over 3,500 mobile app publishers by engaging networks in real-time auction based competition, for 1 billion ad impression every month. Previously, he founded mobile app publishings company, Alfa Productions, with over 4M daily users and $17M annual gross revenue.

Introduction

While Pokémon Go can absolutely be considered a smash success, the game still is not guaranteed to be a cash cow for Nintendo. Several financial analysts have expressed less than bullish attitudes – for example, according to one Morgan Stanley estimate, Pokémon Go will need to generate in the ballpark of $140 to $196 per month, in order to have a meaningful impact on Nintendo’s profits.

That’s a tall order for any game, never mind one like Pokémon Go that’s freely available for downloads and relies solely on in-app purchases to generate revenues. What are some additional strategies Pokémon Go could implement, in order to enhance its money-making capabilities?

Pokémon Go toy

Consider rewarded videos as a form of paid advertising

Rewarded videos – whereby a user is incentivized to click on and watch a video ad, in exchange for points, coins or other tokens that help them advance through the game – are a great way to supplement in-app purchases. Think of it this way – while in-app purchases in Pokémon Go continue to be the “touchdown” in terms of helping users move through the game, rewarded videos can be an “extra point.” Of all types of advertisements, gaming users tend to be most receptive to video, and rewarded videos have been shown to improve gaming app monetization by double-digit percentages.

Leverage User Data

Take advantage of the true golden pot – the new wealth of user data, especially location, but also additional information Pokémon Go collects, including email addresses and previously visited websites. Several weeks ago, Pokémon Go’s developer, Niantic, made headlines when they hinted at plans to adopt a “sponsored location” revenue model. In this model, companies – namely retailers – would be featured in games, and Pokémon Go would receive compensation on a per-visit basis – e.g., each time a Pokémon Go user set foot in a physical store featured in the game.

The problem with this approach is that businesses don’t need store visitors who are just hanging around and only interested in catching Pokemon. These businesses would benefit much more by encouraging visits from strategically targeted, engaged shoppers who actually may be inclined, or have intent, to buy. This is precisely where Nintendo and Niantic have a huge opportunity to make a lot of money – either by starting an ad network themselves, or selling this wealth data to advertisers and/or ad networks. This would provide a tremendous opportunity to conduct targeted advertising with Pokemon Go users – not necessarily while they’re playing the game itself, but as they gravitate to other mobile apps and mobile browsers on their phones.

Capitalize on the vast marketing opportunities presented by augmented reality

In contrast to virtual reality (VR) techniques, which virtually “transport” users to different locations, augmented reality (AR) takes a user’s physical presence and adds something to it. Pepsi Max’s recent “Live For Now” prank, whereby they “changed” a bus shelter wall into a fake window, is a great example of AR. From a marketing perspective, AR is often considered more valuable and effective than VR, since it does not require users to wear special headgear or glasses.

While native advertisements have not traditionally been widespread in gaming, Pokémon Go should consider implementing it and combining these native ads with AR technologies that enable ads to be “swapped in” in real-time, based on users’ locations. The technology that enables this type of “ad transposing” may be the same type that has been used by companies like face swapping app MSQRD (recently purchased by Facebook). In Pokémon Go, interactive, natively designed billboards or “direction signs” could be displayed within the game, featuring ads that change based on users’ physical locations. Combining native ads – which deliver highly effective, “camouflaged” marketing messages – with real-time geotargeting, presents a potent one-two punch that ultimately could help drive significant revenue streams for Pokémon Go.

Conclusion

Most experts agree that Pokémon Go represents a strong foray for Nintendo in the mobile space. And, the game has the potential to serve as a strong model for the upcoming series of mobile games Nintendo is planning to roll out. But as they focus on these up-and-comers, Nintendo must do everything they can to maximize on the Pokémon Go fervor, now – because like any major mobile hit, no knows where the game will be in six months. Implementing rewarded videos; harnessing their newfound wealth of user data; and leveraging the unique marketing opportunities of AR will be critical for Nintendo and Niantic to realize the full revenue potential of this instant, breakout hit.

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